One of China’s problems is
capital misallocation and deleveraging hasn’t
helped improve the problem, warned panelists discussing the
macroeconomic outlook on the world’s
second-biggest economy at the seventh China Capital Markets
by Asifma this week.
The event took place against the backdrop
of a recent downgrade of China’s sovereign rating
from Aa3 to A1 by Moody’s, which has cited the
country’s rising debt problem as the main reason
for the cut.
In April, the China Banking Regulatory
Commission (CBRC) issued new rules setting out stricter risk
controls and management for both domestic and foreign-invested
banks. The banking regulator also red-flagged issues in many of
the country’s banks’ operational
behaviour including excessive leveraging, compliance issues and
multilayered financial products.
But panellists argued that the PRC regulators have been too
focused on the deleveraging of the banking sector, stressing
that the real problem that needs...